SYNNEX Corporation

SYNNEX Corporation (SNX - Snapshot Report) sees market stabilization as the distributor of IT systems recently surprised on estimates for the fourth consecutive quarter. The company also offered up a higher than expected fiscal third quarter forecast. SNY trades with a PEG ratio of just 0.80.

Company Description

SYNNEX Corporation services resellers and original equipment manufacturers (OEMs) in regions around the world.

It distributes IT systems, peripherals, system components, software and networking equipment to more than 15,000 resellers throughout the United States, Canada and Mexico for OEM suppliers such as Hewlett Packard (HP - Analyst Report), IBM (IBM - Analyst Report), Intel (INTC - Analyst Report), and Microsoft (MSFT - Analyst Report).

SYNNEX Surprised By 18.75% in the Fiscal Second Quarter

SYNNEX kept its hot streak alive by surprising on estimates for the fourth quarter in a row. It has averaged a beat of 15.07% during that period. On June 30, the company reported earnings per share for fiscal second quarter 2009 of 57 cents compared to analysts' estimates of 48 cents. EPS was 56 cents in the same quarter of 2008.

Net income rose to $19.2 million from $18.5 million in the year ago period.

Revenue, however, fell 3.5% to $1.81 billion from $1.88 billion in 2008 but rose 4.8% quarter over quarter.

There were some bright spots as the Global Business Services segment saw revenues jump 21.9% to $34.38 million compared to the year ago quarter.

Stronger Than Expected Third Quarter Outlook

The company offered a fiscal third-quarter outlook that is more optimistic than covering analysts. Earnings per share are expected to be in the range of 58 to 61 cents. Covering analysts were at 52 cents.

Because of the discrepancy, covering analysts have been scrambling in the last week to raise third quarter and full year estimates.

Estimates Climb

After the bullish third quarter outlook, 4 out of 4 covering analysts raised third-quarter consensus estimates to 60 cents.

Full year consensus jumped 8.8% to $2.47 from $2.27 per share with all four analysts again raising estimates.

Value Fundamentals

SYNNEX is a Zacks #1 Rank (strong buy) stock. It is trading at 11.5x forward earnings. Its price-to-book is 1.25. The company also has a solid 5-year average return on equity (ROE) of 11.53%.

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